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Capital improvements made to property add life or value to the asset or its structural components. This differs from repairs, which although may be necessary, do not add value or life to the property. The IRS requires that capital improvement expenses be depreciated over time, rather than deducted in full in the year the expense is incurred. Property managers may offer assistance with capital improvement projects to their clients. It is important for managers who provide this service to understand the types of expenses classified as improvements so they can provide correct tax information to property owners.

Exterior Capital Improvements

Exterior improvements add value to the outside of a property. Examples of exterior improvements include those made to roofs, landscaping, drive and walkways, storm doors and windows. Upgrading or installing sprinkler systems, a swimming pool or a fence are additional qualifying exterior improvements.

Interior Capital Improvements

Interior improvements enhance or improve the value of the inside of the property or its structural stability. Examples of interior improvements include new HVAC systems, upgraded wiring, plumbing, and insulation, as well as security systems. Renovations made to modernize bathrooms, kitchens, flooring and appliances are also considered capital improvements.

New Construction

New construction improvements include property additions such as additional bedrooms or bathrooms, a garage and exterior additions such as a porch, deck or patio. This type of improvement may enhance the value of the property by offering additional space conveniences for tenants, thus opening up the property to a broader range of potential renters.

Accessibility Improvements

Accessibility improvements are modifications made to a property that make it more accessible to those who are handicapped or disabled. Examples of modifications include adapting sidewalks and pathways with ramps and widening entry points and doorways to accommodate wheelchairs or other accessibility equipment. It might also include modifying bathrooms to include roll-in showers and additional safety features, as well as lowering cabinets and sinks throughout the property.

About the Author

With a background in taxation and financial consulting, Alia Nikolakopulos has over a decade of experience resolving tax and finance issues. She is an IRS Enrolled Agent and has been a writer for these topics since 2010. Nikolakopulos is pursuing Bachelor of Science in accounting at the Metropolitan State University of Denver.

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Nikolakopulos, Alia. "What Is Considered a Capital Improvement in Property Management?" Small Business - Chron.com, http://smallbusiness.chron.com/considered-capital-improvement-property-management-76443.html. Accessed 14 September 2019.

Nikolakopulos, Alia. (n.d.). What Is Considered a Capital Improvement in Property Management? Small Business - Chron.com. Retrieved from http://smallbusiness.chron.com/considered-capital-improvement-property-management-76443.html

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